US consumer borrowing rises $10.4 billion in July

WASHINGTON (AP) — Americans cut back on using their credit cards in July for the second straight month, while taking on more debt to buy cars and attend school.

The decline in credit-card use suggests consumers remain cautious, a trend that could hold back economic growth.

Consumers increased their borrowing $10.4 billion in July from June to a record high of $2.85 trillion, the Federal Reserve said today. That followed a gain of $11.9 billion in June.

A category that includes auto loans and student loans increased $12.3 billion in July to a record $2 trillion. But a measure of consumers' credit-card debt fell $1.8 billion to roughly $850 billion. That followed an even larger $3.7 billion decline in the credit-card category in June.

July's pattern of consumers' borrowing habits illustrated trends that have surfaced in the post-recession economy: Americans are using credit for their most-urgent needs, while forgoing debt for discretionary purchases.